WARSAW, Feb 13 (Reuters) - The head of Poland’s Bank Handlowy called on Thursday on Polish authorities to spend billions of zlotys in bank tax money on a bank stability fund instead of state budget purposes due to the forthcoming economic slowdown.
In 2016 Poland’s nationalist Law and Justice (PiS) government introduced a bank tax, syphoning billions of zlotys yearly from the sector and more than 4 billion ($1.02 billion) last year alone, according to analysts’ estimates.
The ruling party introduced social handouts including 500 zlotys for every child in a family a month, as well as bonuses for elderly voters, helping it win last October’s general elections and stay in power.
Slawomir Sikora did not comment on PiS’s social programmes, but he called on the authorities to earmark bank tax revenues for a bank stability fund, rather than for covering the state budget’s spendings.
“In the event of an economic slowdown, concern for banking sector stability should be as important as other goals the government sets in its budget,” Sikora told reporters.
“I believe that banking sector stability will be even more important ... because the banking sector is the main supplier of money for the economy and Poland has no strong capital market that could replace banks in this role.”
Poland has enjoyed an economic growth rate higher than many of its European Union peers for years now and its banking sector remains relatively strong, although less profitable than just several years ago.
But economic growth has slowed down, reaching 4.0% last year, less than analysts had expected. Analysts polled by Reuters saw Polish gross domestic product growth slowing to 3.3% in 2020.
At the same time banks have to bear costs such as the bank tax, regulatory costs and the costs of bank guarantee funds.
Most recently the sector was forced to create provisions for legal risk concerning toxic foreign currency mortgages and fees for early short term credit repayments, at 1.6 and 1.0 billion zlotys respectively, according to Santander Bank Polska analyst Kamil Stolarski’s calculations. ($1 = 3.9128 zlotys) (Reporting by Marcin Goclowski Editing by Chizu Nomiyama)